By John O’Donnell and Alexandra Schwarz-Goerlich
VIENNA (Reuters) – Raiffeisen Bank International, the biggest Western bank in Russia, faces a Russian court ruling next week in a $2 billion case that has frozen its business in the country, escalating a dispute with Moscow.
RBI has been under pressure from authorities in the U.S. and Europe to spin off its Russian business following the Ukraine war, part of an effort to isolate Russia with sanctions.
But the Russian court’s decision to freeze Raiffeisen’s local business rules out a sale and makes it all but impossible for the bank to unlock its billions in Russia.
The case is casting a shadow over the Austrian bank, which has yet to set aside provisions for any damages the court could impose.
RBI declined to comment
Raiffeisen has previously said it intends to challenge the court’s ruling. The next court session is scheduled for Dec. 25.
The bank is a longstanding player in Russia’s financial system, providing a route to international currencies like the euro and holding billions in deposits.
But it has been forced, chiefly by the United States, to cut its local business.
That, in turn, put the bank at loggerheads with Moscow.
Raiffeisen has stuck with its highly profitable Russian business but U.S. pressure on the Austrian lender, culminating in a threat to choke off its use of the dollar, has been unrelenting.
Raiffeisen attempted earlier this year to unlock some of its frozen Russian billions by buying a roughly $1.6 billion stake in Austrian builder Strabag linked to Russian tycoon Oleg Deripaska.
But the U.S. pressured Raiffeisen to drop the deal. The collapse of that sale also led to the current Russian legal action.
The court case is centred on a claim by Russian investment company Rasperia against builder Strabag, its Austrian shareholders and the Russian arm of Raiffeisen. Rasperia is seeking $2 billion in compensation.
RBI had sought to buy a stake in Vienna-based Strabag from Rasperia, which Strabag has said is no longer controlled by Deripaska. But Washington identified Rasperia as part of a group of Russian companies still controlled by Deripaska when imposing sanctions in May.
Deripaska has denied existing links to Rasperia and dismissed Western sanctions against him.
Raiffeisen has around 6 billion euros ($6.29 billion) in Russia earned from international payments and from billions of euros of Russian deposits, one person with knowledge of the matter said.
Raiffeisen, with a myriad of industrial holdings, more than 18 million customers from Vienna to Moscow and 44,000 staff, has become a financial anchor for Austria and much of eastern Europe.
RBI has repeatedly said it wanted to spin off its Russian business. But almost three years into the war between Russia and Ukraine, little has changed.
($1 = 0.9536 euros)
(Additional reporting by Alex Marrow in London. Editing by Jane Merriman)
